WASHINGTON —
The Concord Coalition urged Congress and the new Administration to proceed with great
caution as they consider what to do with the $3.1 trillion non-Social Security surplus
projected today by the Congressional Budget Office (CBO).
With two-thirds — or $2.1 trillion — of that amount scheduled to arrive in
the second half of the 10-year forecast, Concord advised that it would be wise for
lawmakers to build a wide margin of error into the amount of the surplus they use for new
initiatives.
WASHINGTON —
The Concord Coalition urged Congress and the new Administration to proceed with great
caution as they consider what to do with the $3.1 trillion non-Social Security surplus
projected today by the Congressional Budget Office (CBO).
With two-thirds — or $2.1 trillion — of that amount scheduled to arrive in
the second half of the 10-year forecast, Concord advised that it would be wise for
lawmakers to build a wide margin of error into the amount of the surplus they use for new
initiatives.
“As we enter a
new era of surplus management, what we do with the surplus will provide a critical test of
fiscal discipline for Congress and the new Administration.
The question is, how much reliance should lawmakers place on 10-year budget
projections that CBO points out could be off by $3 trillion in either direction given
alternative assumptions? While we hope
fiscal discipline will survive these surpluses, policymakers must not lose sight of the
larger fiscal picture that is framed by the retirement costs of the baby boomers,”
said Concord Executive Director Robert Bixby.
“Unfortunately, CBO
is not a branch of the U.S. Mint. CBO does not make money, it makes projections,
which over a 10-year period are as fragile as they are tempting. Simply holding discretionary spending to
inflation, as CBO has projected, will require a level of fiscal restraint far in excess of
that demonstrated over the last several years,” Bixby said.
“Financing permanent commitments with projected
surpluses is like buying a new wardrobe before you’ve lost the weight. You’re assuming that something desirable will
happen before it actually takes place. While
we can hope that these surplus dreams come true, we should not rely on a surplus of
optimism,” Bixby said.
The Coalition reiterated its long-held
position that the highest priority for any surplus that materializes is to help prepare
the economy for the demographic tidal wave that will begin to manifest itself at the end
of the current 10-year budget window. “The
baby boomers will begin to collect Social Security benefits in 2008, and will qualify for
Medicare in 2011. Neither program is fiscally sustainable in its current form. Until we
have dealt with that fundamental generational problem, we should save every surplus dollar
that comes our way,” Bixby said.
The Concord Coalition was founded in 1992 by
former Senator Warren Rudman (R-N.H.), the late Paul Tsongas, former Democratic Senator
from Massachusetts, and former Secretary of Commerce Peter Peterson. Former Senator Sam Nunn (D-Ga.) joined Rudman as
co-chair of the organization in 1997. The
Concord Coalition is a nonpartisan, grass roots organization dedicated to balanced federal
budgets and generationally responsible fiscal policy.
